Standard Bank of SA (Pty) Ltd and Another v Lesotho National Life Assurance Co. Ltd and Another (4064/2002) [2003] ZAFSHC 4 (13 March 2003)

IN THE HIGH COURT OF SOUTH AFRICA

(ORANGE FREE STATE PROVINCIAL DIVISION)

CASE NO 4064/2002

In the matter between

The Standard Bank of SA Ltd First Applicant

The Standard Bank Fund Managers Ltd Second Applicant

v

Lesotho National Life Assurance Co Ltd First Respondent

S L J van Jaarsveld Second Respondent

Coram: Schoeman, J

Heard on: 27 February 2003.

Judgment by: Schoeman, J

Delivered on: 13 March 2003.

[1] This is an application for the consolidation of two separate actions: the one, case number 770/2002, where the first applicant is the plaintiff against the second respondent, and the other, case number 942/2002 where the first respondent is the plaintiff against second applicant, whose name has changed to Standard Bank Unit Trusts Ltd. For the sake of expediency, I will refer to the parties by name.

[2] It appears from the application that the chronology of the relationship and the causes of action between the role players are:

Stanfin, a wholly owned subsidiary of first applicant ("Standard Bank"), employed second respondent ("van Jaarsveld") as a broker to procure business for the Standard Bank Group of companies i.e. companies that are controlled by Standard Bank;

Van Jaarsveld procured different investments from first respondent ("LNLAC") that were invested with second applicant, ("SBUTL") a company that forms part of the Standard Bank group.

As one of the investments, first respondent ("LNLAC") invested R16-million with SBUTL. According to LNLAC, as plaintiff, (Case 942) the investment was for a three-year period with a guaranteed return of R25-million; the three-year investment period has lapsed and LNLAC is entitled to payment. The SBUTL allege the relevant investment was for a five-year period and the amount is not yet due and payable.

Standard Bank claimed an amount of approximately R3-million from van Jaarsveld, by way of claims A and B, based on second respondent’s breach of his employment contract (Case 770), relating to investments LNLAC made with SBUTL and these investments were duly paid out.

Prior to the start of the last mentioned trial, (Case 770) van Jaarsveld and Standard Bank entered into an agreement in terms of which a conditional third claim be added to case number 770, which claim is a claim ceded by SBUTL to Standard Bank on the premise that in the event of the court finding in favour of LNLAC in case 942, van Jaarsveld is liable to recompense SBUTL for the loss so suffered. To succeed in this conditional claim, Standard Bank will have to prove fraud on the part of van Jaarsveld. In this trial handwriting experts and computer experts are expected to testify.

At the time the parties (Standard Bank and van Jaarsveld in case 770) envisaged that there would be consolidation of the two mentioned actions as this conditional claim flows directly from the action between SBUTL and LNLAC. SUBTL ceded its claim to Standard Bank to enable Standard Bank to have locus standi in respect of the conditional claim.

Second respondent does not oppose the application for consolidation.

[3] In New Zealand Insurance Co Ltd v Stone and Others 1963(3) SA 63 (C) at 69 A-C Corbett AJ (as he then was) said:

"In this particular matter it is clear that the Court is concerned with the latter type of consolidation, namely, the consolidation of actions merely for the purpose of the hearing. In such an application for consolidation the Court, it would seem, has a discretion whether or not to order consolidation, but in exercising that discretion the Court will not order a consolidation of trials unless satisfied that such a course is favoured by the balance of convenience and that there is no possibility of prejudice being suffered by any party. By prejudice in this context it seems to me is meant substantial prejudice sufficient to cause the Court to refuse a consolidation of actions, even though the balance of convenience would favour it. The authorities also appear to establish that the onus is upon the party applying to Court for a consolidation to satisfy the Court upon these points."

[4] It is on the basis of these principles that I propose to approach the question of consolidation in the present case.

[5] The two prerequisites that must be satisfied before consolidation of the actions can be ordered are the balance of convenience of the parties and the Court and that the consolidation must not substantially prejudice any of the parties. If the balance of convenience does not favour consolidation or there is substantial prejudice to any of the parties, the Court will not order consolidation.

[6] The only nexus between the two claims is the conditional claim by Standard Bank against van Jaarsveld and this claim was ceded by SBUTL to Standard Bank.

Convenience

[7] In the case of The Maize Board v F. H. Badenhorst and 18 Others Case number 3260/2001, an unreported judgment of the Free State Provincial Division delivered on the 28th of February 2002, Hancke J, when discussing convenience said:

"It appears that the word ‘convenient’ in the contect of rule 11 is not intended to convey only the notion of ‘facility or ease or expedience’, but also the notion of ‘appropriateness’. In Minister of Agriculture v Tongaat Group Ltd 1976(2)SA 357 (D) Miller, J, said the following at 363C-D:

"The word 'convenient' in the context of Rule 33 (4) is not used, I think, in the narrow sense in which it is sometimes used to convey the notion of facility or ease or expedience. It appears to be used to convey also the notion of appropriateness; the procedure would be convenient if, in all the circumstances, it appeared to be fitting, and fair to the parties concerned’".

[8] Mr du Plessis on behalf of the applicants argued that it would be to the convenience of all the parties and the Court if consolidation were ordered. The convenience of consolidation lies in the following:

the same witnesses will testify in both actions;

the Court will not make different credibility findings in different cases on the same evidence if the trials were consolidated;

it will be to the convenience of the Court if all the available evidence be placed before Court. The Court will be able to better adjudicate the matter if all the relevant witnesses testify, as some witnesses might not testify in both actions if the trials are not consolidated.

Mr du Plessis further argued that the opposition to the consolidation application is rooted in the fact that LNLAC wants to prevent the attempt to put available witnesses before court. It appears that an aspect of the possible defence of SBUTL in LNLAC’s claim against it, is that van Jaarsveld acted fraudulently and possibly in collusion with employees of LNLAC. For these purposes it would be to the convenience of Standard Bank if all the witnesses were to testify in the same trial. Van Jaarsveld would possibly not testify on behalf of SBUTL in the trial of LNLAC versus SBUTL (Case 942) and the employees of LNLAC indicated that they would not consult with the legal representatives of Standard Bank prior to the trial by Standard Bank versus van Jaarsveld (Case 770). Mr Viljoen, on behalf of the first respondent, argued that the attitude of the employees of LNLAC is understandable, as SBUTL refuses to pay out an investment of R16-million.

[9] It would thus be convenient for the applicants, if both trials could be consolidated, as witnesses that could not be called or be consulted with, would have to be called by the respective opposing parties.

[10] Mr du Plessis did not advance any factors that could be to the convenience for LNLAC in consolidation of the trial.

[11] The inconvenience for LNLAC as argued by Mr Viljoen, on behalf of the first respondent, lies in the fact that LNLAC’s claim against Standard Bank is based on certificates issued by van Jaarsveld in terms of which the investments referred to in paragraph [2](3) supra, are for a five year period. The claim is simple and the lack of authority of van Jaarsveld is not an issue. It would not be convenient for LNLAC if they were to sit through a trial dealing with the fraud of van Jaarsveld committed against his employer, Standard Bank. It is most unlikely that any one of the separate actions will be as lengthy as the consolidated trial. The purpose of joinder under Rule 11 is to ensure that that issues which are essentially the same are heard and determined in one trial so as to avoid a multiplicity of actions with the concomitant disadvantages and prejudice.

[12] The convenience of the Court would be that different courts would not pronounce on credibility of the same witnesses in different trials on possibly the same evidence.

[13] The fact that all possible witnesses would probably testify in one trial, as advanced by Mr du Plessis in paragraph [8](c) supra, is not a factor that should be taken into consideration when deciding whether consolidation would be convenient to the Court. It is not for the Court to influence proceedings, so that certain witnesses are compelled to testify in a trial, to enable the Court to come to a just decision. It is for the Court to decide the case on the evidence placed before it, as it is not authorised to call witnesses in a civil trial. Therefore it is not a trail Court’s duty or privilege to be able to decide a case with all the possible witnesses having testified, but to decide the case on the evidence of those witnesses that the parties elect to call.

[14] I am of the opinion that consolidation should be convenient, and this includes "fair", to all the parties as expressed in the Tongaat Group-case referred to above. In the instant matter it would not be convenient to all the parties, as it would not be convenient to LNLAC.

Prejudice

[15] Prejudice also exists if a party is forced to forego the advantages that the Rules and the law of evidence provide. In London and Lancashire Insurance Co Ltd v Dennis NO and Others 1962(4) SA 640 (D&C) at 646D-F Wessels J stated:

"I am further of the opinion that if a consolidation of the actions were to be ordered the respondents (or one of them at least) might be prejudiced in not being in a position at the trial to avail themselves of the provisions of the Rules of Court dealing with the procedure at the hearing of actions. It is to be borne in mind that in both actions the burden of proof relating to the matters in issue is upon the plaintiffs. In the normal course of events the plaintiffs would have been entitled and indeed required to lead their evidence first. This Rule further contemplates that a plaintiff will be in a position to place on record the evidence which he wishes to adduce in support of his case. He will be entitled at the conclusion of the case to address the Court first and will moreover have the last word. If the actions were to be consolidated a question might well arise as to the order of precedence as between the different plaintiffs. One or other of the plaintiffs is bound to find himself in a position where evidence destructive of his case is placed on record before he has any opportunity of leading his own evidence. There will in effect be a trial in the sense that in so far as the issue of negligence is concerned the respondents will in turn be plaintiff and defendant. The applicant has not satisfied me that the respondents are not likely to be prejudiced in the conduct of their separate cases by virtually being forced to join as co-plaintiffs in circumstances where their interests do not run together but conflict." (My emphasis)

[16] I am of the opinion that it would be the same in this instance. The interests of LNLAC and van Jaarsveldi are definitely in conflict. Van Jaarsveld will be held liable against Standard Bank on the conditional claim if LNLAC’s claim against SBUTL is successful. The probabilities are that van Jaarsveld will not be a willing witness on behalf of SBUTL in the trial in case 942, but his evidence would have bound SBUTL if he did testify on their behalf against LNLAC. If consolidation is granted Standard Bank and SBUTL will have the advantage of being able to cross-examine van Jaarsveld in respect of Standard Bank’s claim against him as well as in the claim of LNLAC against SBUTL. This might be prejudicial to LNLAC as it would be to van Jaarsveld’s advantage if the claim by LNLAC against SBUTL were dismissed, as that would mean the end of the conditional claim against him.

[17] It is significant that Mr du Plessis did not in his heads of argument, nor in his argument in Court address the issue of the first respondent’s prejudice in the event of consolidation.

[18] The two cases to be consolidated do not have the same parties, and they do not have the same issues to be decided. In all the cases that I have been referred to either the plaintiffs or defendants are the same parties in the actions to be consolidated. In this instance the applicants want to consolidate claims where none of the parties are the same and the issues are not the same, except for the conditional claim that was ceded. The witnesses might be the same, although in the different trials different parties would call them, if they were called.

[19] The balance of convenience does not favour consolidation and the first respondent will be prejudiced by consolidation. The application cannot succeed.

[20] Mr Viljoen asked for the costs of two counsel. In both main cases applicants and the first respondent are represented by two counsel; the facts of this matter are such that I am of the opinion that the costs of two counsel are warranted.

[21] The following order is made:

The application is dismissed with costs; and the costs to include the costs of two counsel. The applicants are ordered to pay the costs jointly and severally.

___________________________

I Schoeman, J

On behalf of Applicants: Adv. R. du Plessis Instructed by Israel and Sackstein Incorporated.

On behalf of Respondents: Adv. H. P. Viljoen SC and R.G.L. Stelzner Instructed by Webbers.